Majority Shareholder on the Composition of Public Ownership and Tax Avoidance Practices in Public Companies

Abstract

This study attempts to analyze the effectiveness of the enforcement of regulations on public share ownership. Specifically, this study analyzes whether there are differences in the composition of public ownership between before and after the regulation was enacted. By using independent t-test, carried out on the Indonesia Stock Exchange during 2008-2011 with a total of 320 observations (company-years), regarding the effectiveness of regulations regarding the provision of tax incentives associated with the proportion of public share ownership, the difference is analyzed with the deadline for the enactment of government regulations on reduction of income tax rates for public entity taxpayers in the form of public company and the Minister of Finance Regulation regarding the procedure for implementing and monitoring the decreasing of granting tariffs for domestic corporate taxpayers in the form of public companies. The results indicate that the regulations were not proven to empirically have significant effect in increasing the proportion of public share ownership in the capital market, and are more likely to lead to trade-offs with government efforts to increase tax revenues and reduce the practice of tax avoidance by companies. Therefore, it is necessary to review the tax incentive scheme that can be given to companies going public in order to be effective in increasing public share ownership in Indonesia and not trade-off with the practice of corporate tax avoidance.

Board Political Connection and Tax Avoidance: Ownership Structure as A Moderating Variable

“…However, other findings indicate that high public ownership increases companies' likelihood of tax avoidance (Alexander, 2019;Bauwhede et al, 2003). Contrary to these two groups of findings, Iqbal et al (2020) research failed to prove the relationship between public ownership and tax avoidance. This research can be a starting point for further research on public ownership in public companies' tax evasion practices in Indonesia.…”

Role Ambiguity, Role Conflict, Auditor Competence on Audit Quality: The Mediating Effects of Auditing Planning and Independence

“…Fisher [11] found that role ambiguity has a significant negative effect on job performance and auditor job satisfaction. Iqbal et al [12] show that role ambiguity has no significant effect on auditor performance.…”

Impact of Tax Structure Dynamics, Human Resource Development and Distribution of Income on Economic Growth of Pakistan

“…According to the legislative authorities, taxes are considered compulsory government contributions rather than voluntary payments or donations. Nowadays, more focus is being given to the characteristics of economic systems in the race for a globalized international environment in achieving potentially more prosperous economic goals (Iqbal et al, 2020). Although each country's tax system has separate economic regulations accordingly, countries develop their own appropriate system for the economy.…”

“…Tax reduction advocates contend that lower tax rates encourage saving, investing, and productive work and have an effect on a nation's economic growth (Ferede & Dahlby, 2012). For example, the studies by Iqbal et al (2020) and Iram et al (2020) show different results in economic growth as a consequence of the change in taxes. In evaluating the tax revenue systems of India and Pakistan from 1999-2000to 2008-2009, Aamir et al (2011 conducted an extensive study.…”